Energy crisis: some causes and effects. III. A look at international oil, the OPEC cartel, and windfall profits
Journal Article
·
· World Oil; (United States)
OSTI ID:6743661
Oil-company ''windfall'' profits result from the interplay of foreign cartel prices and U.S. production costs. Even foreign prices are subject to constraints, even though the monopolistic price ceiling is not yet known. Windfall profits, now being hotly debated, are no more or less than a free-market signal for more intensive energy research. As a numerical simulation of the energy problem demonstrates, the energy sector's capacity for raising research funds is declining, emphasizing the need for remedial action immediately. The numerical simulation shows the advantages of 1-tier over 2-tier pricing of oil: Though the total cost to the consumer would be greater with 1-tier pricing, the foreign cartel profit and the associated U.S. dollar drain would be lower; most importantly, funds would be generated for research and development of energy sources as alternatives to oil imports. While OPEC is the most visible cartel today, there have been 2 others recently: the now-defunct U.S. oil import quota system and the governments of oil-consuming countries, particularly those in Europe. Indeed, monopolistic behavior exhibited by the consuming countries (through exorbitant levels of revenue-producing taxation) may have helped bring OPEC into being. Only a concerted effort by both producing and consuming countries to understand each other's economic reasoning offers hope for a relatively stable future.
- OSTI ID:
- 6743661
- Journal Information:
- World Oil; (United States), Journal Name: World Oil; (United States) Vol. 178; ISSN WOOIA
- Country of Publication:
- United States
- Language:
- English
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